China Declares War on Toxic Price Wars

Subsidized Discounts Hurt Chinese Businesses and Consumers

By Shuli Ren

China has declared an end to its own toxic price wars, as escalating discounts have begun to hurt businesses and consumers up and down the value chain. In a meeting of the Chinese Politburo, the country's most powerful political body, officials discussed the harmful effects of price wars and vowed to take action to address the issue.

The decision to crack down on price wars comes as Chinese e-commerce vendors struggle for survival amid slowing sales growth and intense competition. A ferocious price war during the Singles Day shopping holiday in 2021 led to significant losses for many retailers, forcing some to close their doors.

The government is concerned that continued price wars will not only hurt businesses but also lead to lower product quality and reduced consumer choice. As businesses slash prices to attract customers, they may be forced to cut corners on production costs, resulting in inferior products. Additionally, consumers may become accustomed to artificially low prices, making it difficult for businesses to charge fair prices in the future.

The government has not yet announced specific measures to combat price wars, but it is expected to take a multifaceted approach involving regulation, education, and incentives.